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Power Cut Forces Biggest Coal Terminal to Review Targets

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April 4 (Bloomberg) -- South Africa’s Richards Bay Coal Terminal is reviewing targets for 2015 after a power cut in February forced it to reduce this year’s goal, the head of the world’s largest standalone export facility for the fuel said.

RBCT trimmed its forecast for shipments this year to 73 million metric tons from 75 million tons after it had to halt operations for almost 10 days in February because of faults on municipal power cables that cut supply, Chief Executive Officer Nosipho Siwisa-Damasane said. While it cleared the backlog by March 31, the facility, together with exporters and Transnet SOC Ltd., the state-owned ports and rail utility, faces losses of about 2.1 billion rand ($197 million).

If the original target stands “we are going to 77” million tons next year, Siwisa-Damasane, 48, said in an interview in Bloomberg’s Johannesburg office yesterday. “We’ve got to replan with Transnet. We can recover from it if our efficiencies get better on the supply chain and the volume is there.”

Exports were a record 70 million tons last year and are forecast to rise to 81 million tons in 2016, she said.

The facility, whose biggest shareholders are Glencore Xstrata Plc and Anglo American Plc, has annual handling capacity of 91 million tons, or 250,000 tons daily. Coal is hauled to RBCT, located on the northeastern coast of Africa’s largest economy, by Transnet Freight Rail, the utility’s biggest unit. Sasol Ltd. and Total SA’s local coal division also hold stakes in the terminal.

Own Line

The power failure on a 38-year-old line belonging to the local municipality triggered an emergency plan that has successfully tested the terminal’s ability to handle 91 million tons a year because of the need to clear the backlog, Siwisa-Damasane said.

“We’ve stretched ourselves to those levels, we’ve tested our capacity,” she said. “And it’s slightly more because there are actually days where we did more. We proved it for a month and a half.”

A dedicated line provided by Eskom Holdings SOC Ltd., the state power company, will be tested this month with the expectation that the stoppage won’t be repeated, she said.

After the setback, RBCT is considering moving ahead with its sixth and final expansion plan, which will increase capacity to its maximum of 110 million tons. Smaller, black-owned miners will then have access to 34 million tons of annual export capacity.

Second Terminal

The plan, which is at the pre-feasibility stage, would be implemented in about four years pending approval from all stakeholders including Transnet, she said.

While the ports and rail operator said last year it may build a smaller terminal in the region for the same purposes RBCT wants to partner Transnet in the expansion of its own facility.

“We want to do it with Transnet; we don’t want to do it with anybody else, because it makes sense,” Siwisa-Damasane said. “We don’t mind the model, we want to work with them.”

While RBCT won’t be able to expand any further once it gets to 110 million tons the entire port, which also ships other commodities, could eventually handle a total of 140 million tons of the fuel a year including RBCT, she said.

Rail Investment

Transnet is investing 300 billion rand over seven years to add new rail lines, ports, pipelines and improve infrastructure in South Africa. The company, which owns and manages 20,000 kilometers (12,430 miles) of rail, has improved efficiencies on its lines, Siwisa-Damasane said.

“The coal line is the most efficient line at the moment,” she said. “So if you want to divert it into another terminal, you are going to destabilize the efficiencies.”

The terminal has stockpiles of 38 different grades of the fuel, all of which are of “high quality,” Siwisa-Damasane said. In 2013, Asia, led by China and India, accounted for 75 percent of exports, followed by Europe with about 21 percent, data from the terminal’s website shows.

The terminal isn’t concerned about competition from coal exports from neighboring Mozambique and a plan to rail coal from Botswana to Namibia’s Walvis Bay port.

“There’s enough room for everyone,” she said.

To contact the reporter on this story: Kamlesh Bhuckory in Johannesburg at kbhuckory@bloomberg.net

To contact the editors responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net Ana Monteiro, John Bowker

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